Packaged retail and insurance-based investment products (PRIIPs) are increasingly being offered that target specific social or environmental objectives, and not only purely financial objectives. In light of this, article 8(3)(c) of the PRIIPs Regulation requires a section of the key information document (KID) entitled “What is this product?” to outline the nature and main features of the PRIIP. But given the variety of PRIIPs, questions have arisen as to the sufficient level of clarity and specificity that such social and/or environmental objectives should have, and the appropriate measures that a retail investor can expect to be in place for PRIIPs that pursue such targets.
On 31 May 2016, the European Commission mandated the Joint Committee of the European Supervisory Authorities (ESAs) to provide technical advice specifying the details of the procedures used to establish whether a PRIIP targets specific social or environmental objectives. A consultation paper setting out draft technical advice was published by the Joint Committee of the ESAs on 10 February 2017. The consultation closed on 24 March 2017.
The Joint Committee of the ESAs has now published joint technical advice on the procedures used to establish whether a PRIIP targets specific social or environmental objectives pursuant to Article 8(4) of PRIIPs Regulation.
Following the consultation, the technical advice has been updated, with the main changes being:
- the drafting was augmented to indicate more clearly where the existing legal framework addresses the issues raised in the Commission’s mandate, including in particular the extent to which the UCITS Directive, Alternative Investment Managers Directive, and the product oversight and governance measures in MiFID II and the Insurance Distribution Directive address the different expectations;
- the drafting was adjusted to avoid the implication that a new designation or label (‘environmental or social PRIIPs’) was being established; and
- the drafting was adjusted to avoid any implication of a lack of neutrality across the full range of environmental or social objectives.
View Joint Committee of ESAs technical advice on PRIIPs with environmental or social objectives, 28 July 2017